April 2008 Consumers and Designer Brands a global Nielsen report INSIDE: Consumers lap up luxury brands Global consensus that luxury is overpriced One in two consumers believe the purpose of luxury goods is to project social status Imitation designer wares fail to impress American brands most popular among world’s consumers But if we won the lottery, it’d be Gucci all the way What’s on the Horizon for Designer Brands? Consumers lap up luxury brands In the face of a rapidly shifting retail landscape, the luxury brands sector To what extent do you agree with the following statements? continued to climb to new starry I buy designer brands heights in the past few years. The Global average latest Nielsen survey on designer brands reveals that consumers remain Agree Neutral Disagree Don’t know 1% enraptured by the allure of luxury, 100 4% 2% 4% 3% 3% and there are generous payoffs for 90 28% 39% designer brands that dare to diversify. 80 43% 38% 46% 41% Nielsen’s global designer brands survey, 70 the largest of its kind, gauges the current 60 and aspirational purchasing habits of 50 50% online consumers across the globe. This 40 42% 43% 41% 38% 38% year’s survey reveals that one sixth (16%) 30 of the world’s consumers claim to buy 20 designer brands, while one-third (31%) 10 19% 15% 17% 15% 15% 15% claim to know a designer label buyer. “In 0 the last few years, the luxury sector has Asia Pacific Europe EEMEA North Latam Global really opened up. We have seen many America average design houses beginning to diversify their offerings to ensure they are catering for consumers of all ages – from babywear to To what extent do you agree with the following statements? pet accessories! It’s not unusual for designer Many people I know buy designer brands brands to offer two or three diffusion lines to cater for different consumer segments Global average as well as expanding into accessories, Agree Neutral Disagree Don’t know luggage, jewellery, homewares and 100 10% 7% 8% 7% 6% 9% interiors and even the technology sector 90 15% with branded mobile phones - and 80 28% 27% 30% 28% 31% consumers are responding positively,” 70 remarked Karen Watson, Chief 25% 60 Communications Officer, The Nielsen 50 33% Company. 36% 30% 32% 40 34% 30 54% 20 33% 32% 29% 31% 10 25% 0 Asia Pacific Europe EEMEA North Latam Global America average 1 The world’s biggest luxury shoppers The world’s biggest designer fans hail from Greece, where almost India comes in third place in the designer brand ranking, with half of consumers (46%) claim to buy designer brands themselves, 35 percent claiming to buy designer wares. The economic boom in and almost three-quarters (73%) claim to know a label-chaser. India is churning out a new breed of consumers who seek out The Greeks have proven to be voracious apparel consumers. designer brands to advertise their newly found status. “Indian According to Nielsen’s latest Consumer Confidence survey, designer shoppers prefer well-known brands such as Louis Vuitton two-fifths (42%) of Greek consumers spend their spare cash on and Gucci which have an international, high-profile image – and new clothes, and almost half (47%) spend it paying off their also because both these brands have opened up large stores in well-worn credit cards! Another Nielsen India in the past few years, making their consumer brands survey that is products more visible and accessible to conducted in Greece twice a year buyers”, said Partha Rakshit, Managing revealed that 55 percent of Greeks Director, Nielsen South Asia. claim the presence of branded products For many Hong Kongers, Hungarian consumers clock in at number four is the key driver for store selection. owning luxury goods has on the designer label ranking. Italian designer Nearly one in two Greeks (51%) buy streetwear label Diesel is the brand of choice new clothes once a month with 47% evolved from an occasional for almost a quarter (23%) of Hungarians, saying they buy apparel whenever they indulgence to a regular ritual. with 13 percent claiming to buy Calvin Klein. see something they like. Mitch Barns, President, Nielsen Other well-known designer labels have very Shopaholic Hong Kongers are hot on Greater China low response rates in this market. Diesel and their Hellenic heels, with 38 percent Calvin Klein are well-known in Hungary, claiming to buy designer brands. Hong especially Diesel, and many of their products Kong has long been regarded as a are in a price bracket which makes them shopper’s paradise and Hong Kongers have a reputation to be accessible to a wide variety of Hungarians. early adopters of new and emerging fashion labels and trends. The oil-rich UAE, the Middle East’s ‘bling’ capital, takes fifth place. Luxury brands are accessible to young Hong Kongers as they enjoy The booming UAE is brimming with a growing segment of newly a high disposable income because it’s traditionally accepted to live minted locals as well as a high percentage of expatriate consumers at home until your late twenties and thirties or until you get who are attracted by the country’s favourable tax system and married. The money that brand-obsessed and fashionable locals possess a high level of disposable income. Designer outlets save on living expenses is happily spent on designer shopping dominate Emirati shopping centres, and 95 percent of the world’s sprees. premier brands have a presence in the Emirates. Hong Kong is the only country in the Asia Pacific region with a The extreme weather conditions often force consumers indoors to chain store – aptly named “Milan Station”, devoted to selling air-conditioned shopping malls, increasing their awareness of secondhand luxury and branded goods. Not only does this designer brands and influencing buying behaviour. In addition, the showcase Hong Kongers’ love for luxury goods, it also exemplifies UAE attracts wealthy residents from neighbouring Saudi Arabia their desire to stay on trend. The success of this secondhand retail who arrive in Dubai with one priority – to shop. chain in Hong Kong supports the local insatiable obsession and appetite for cutting-edge luxury, allowing fashion addicts to sell their out-of-season wares for cash to buy the latest design. 2 To what extent do you agree with the following statements? I buy designer brands Top 10 agree 100 90 80 70 60 50 46% 38% 40 35% 32% 31% 30 27% 27% 26% 23% 22% 20 10 0 India UAE Greece Poland Ireland Hungary Hong Kong Philippines South Africa Netherlands To what extent do you agree with the following statements? Many people I know buy designer brands Top 10 agree 100 90 80 73% 70 63% 62% 60% 60 57% 53% 53% 52% 50% 50 47% 40 30 20 10 0 UAE Brazil India Greece Mexico Ireland Hungary Thailand Hong Kong South Africa 3 Global consensus that luxury is overpriced To what extent do you agree with the following statements? Designer brands are usually overpriced for what they are Once upon a time, many global design Agree Neutral Disagree Don’t know houses claimed their point of difference as 100 3% 4% 2% 2% 3% superior quality. Nowadays it’s all about 5% 4% 9% 7% 4% 7% 7% 90 17% brand and values – the “image” the label 16% 14% 19% 80 20% 22% represents. The overwhelming majority of 70 consumers (71%) believe that designer 60 50 brands are overpriced for what they are, 77% 77% 75% 71% 40 68% 67% but only a quarter (25%) believe that 30 designer brands are of significantly higher 20 quality than standard brands. 10 0 Asia Pacific Europe EEMEA North Latam Global Unsurprisingly, in markets such as Ireland, America average Argentina and Australia, where high-street fashion provides an affordable and fashionable alternative to expensive To what extent do you agree with the following statements? designer brands, consumers tend Designer brands are of significantly higher quality than standard overwhelmingly to believe that designer brands Agree Neutral Disagree Don’t know products are overpriced. In Australia, high 100 3% 4% 4% 8% 4% 4% import duties mean that for the large 90 24% 21% 29% 30% majority of consumers, designer labels can 80 35% 36% be very expensive, and the local fashion 70 industry is burgeoning as a result. 60 50 44% 41% 34% 41% The quality of designer fashion has been 40 41% 41% 30 a contentious issue in recent years. The 20 28% 20% 30% 20% 33% 25% world’s most historic fashion houses 10 0 have evolved their offerings to complement Asia Pacific Europe EEMEA North Latam Global changing market dynamics, trading America average perceived quality for directionality and leading-edge design. The world’s most To what extent do you agree with the following statements? sartorially sceptical consumers come People who wear designer brands are trying to project social status from Japan, where there is a proliferation Agree Neutral Disagree Don’t know of quality goods, and frosty Sweden and 100 4% 5% 6% 5% 3% 5% Austria, where functional fashion is the 10% 90 10% 9% 8% 18% 13% norm. In contrast, in the oil-rich UAE, 80 20% 70 28% 28% 32% which in recent years has morphed into 30% 60 34% one of the biggest designer shopping 50 centres in the world, 43 percent of consumers 40 67% 30 consider designer products to be of higher 57% 57% 55% 52% 20 44% quality than their standard counterparts. 10 0 Asia Pacific Europe EEMEA North Latam Global America average 4 Interestingly, in Asian countries such as Singapore, Malaysia and the Philippines where black markets for contraband designer products thrive, designer goods are perceived to be of higher quality by over two-fifths of the population.